TransCanada to start work on Keystone XL in Montana in fall 2018 -letter

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WASHINGTON/CALGARY, Alberta, May 3 (Reuters) - TransCanada Corp plans to start preliminary work on its Keystone XL pipeline project in Montana in the fall of 2018 ahead of full construction in 2019, according to a letter from the U.S. State Department to Native American tribes.

The letter, dated April 10, and seen by Reuters, states that the Assiniboine and Sioux tribes were being notified of the upcoming work as part of government consultation aimed at minimizing any adverse effect on their historic territory in northeast Montana.

The 1,180-mile (1,899 km) Keystone XL pipeline project has been a lightning rod of controversy for a decade, hotly contested by environmentalists but desperately needed by Canadian oil producers who face steeper-than-normal crude price discounts due to transportation bottlenecks.

“As you may be aware, TransCanada Keystone Pipeline, L.P. (Keystone) intends to begin vegetative clearing in preparation for the construction of the Keystone XL Pipeline (Project) this fall,” the State Department letter said. TransCanada Keystone Pipeline, L.P. is a subsidiary of Calgary-based TransCanada.

Sent from the Bureau of Oceans and International Environmental and Scientific Affairs within the State Department, the letter added that the work would involve “clearing vegetation to build the construction camps and pipe yards this fall (2018) with pipeline construction to begin next year (2019).”

TransCanada has not yet made an official investment decision on the $8 billion pipeline, which would extend from Hardisty, Alberta, to Steele City, Nebraska, though the company has said previously that it expects to start construction in 2019.

When asked about the letter on Thursday, TransCanada said: “We are progressing towards a final investment decision. We expect construction to begin in 2019 and we are doing the necessary work to prepare for those activities.”

The State Department did not immediately respond to a request for comment on the letter, which also notifies the Montana tribes that they will be consulted on new survey work to be done in the spring and summer of 2018, due to a route change in Nebraska.

U.S. President Donald Trump handed TransCanada a federal permit for the pipeline in March, reversing a 2015 refusal by former President Barack Obama. But the line has run into hurdles in Nebraska, where it was approved but not along TransCanada’s preferred route, and the approval is now being appealed.

“The question is will they build a pipeline to nowhere?” said Brian Jorde, a lawyer who represents Nebraska landowners fighting the pipeline. “This is an investment risk analysis TransCanada must perform.” (Reporting by Valerie Volcovici in Washington and Julie Gordon in Calgary; Editing by Tom Brown)